Here's What's In Citi's Gloomy New Report On The Crisis In Spain

We've now seen a copy of the report, and get tell you some more
details.

Here is our bullet-pointed summary of the report:

Spain's public finances are worse than officially stated.
Already there have been upward revisions to debt-to-GDP, and the
number could rise as high as 90% when all the various categories
of debt are added together.

The fact that GDP assumptions are badly missing estimates
makes this all worse.

Although Spain's banks get a lot of attention for being ugly,
the non-financial sector is doing badly as well. Households are
overleveraged.

The new government delayed reform legislation too long,
missing the 'honeymoon period'.

The spending problems in various autonomous regions are big,
and the central government cannot control them.

Buiter's Conclusion:

Spain is likely, in our view, to be pushed into a troika (EC,
ECB, IMF) programme of some kind during 2012, possibly by losing
access to market funding on affordable terms, but more likely by
the ECB making a programme for the Spanish sovereign a condition
for continued willingness to fund the
Spanish banks, which are currently the main buyers of newly
issued Spanish sovereign debt. The existing and likely near
future EFSF/ESM and IMF financial facilities are unlikely to be
sufficient to both fund the Spanish sovereign fully and leave
enough financial ammunition in reserve to deal with
possible sovereign financial emergencies in Italy or in the
‘soft-core’ of the euro area. The Spanish sovereign would
therefore likely continue to fund itself at least partly in the
markets even if it comes under a programme. To ensure market
access by the Spanish sovereign, the same combination of cheap
ECB funding for periphery banks and financial repression of
periphery banks by their national authorities that has been
effective in lowering sovereign yields since the first LTRO is
likely to be required.